WASHINGTON--After considering public input, the HHS Office of Inspector General has withdrawn a Medicare exclusion rule proposed in 2003.

The rule, originally proposed Sept. 15, 2003, sought to establish the OIG's authority to exclude individuals or entities from Medicare if they charged the program "substantially in excess" of usual charges for items or services. The rule defined charges 20 percent higher than elsewhere in the marketplace as excessive, saying that differential was "high enough that most people would agree that the charges to Medicare are substantially in excess."

But in its withdrawal notice, the OIG concluded that it did "not have sufficient information to establish a single, fixed numerical benchmark for 'substantially in excess' that could be applied equitably across health care sectors and across items and services, as we originally proposed."

While some of the 323 commenters supported the proposed rule, the OIG said others argued that its definitions were arbitrary and unworkable. Several commenters said the rule might have the unintended consequence of increasing health care costs, explaining that to comply with the rule, providers that were charging Medicare in excess of the 120 percent benchmark might opt to raise their prices to other payers rather than lowering their charges to Medicare.

The OIG said it "remains concerned about disparities in the amounts charged to Medicare and Medicaid when compared to private payers," but at this time it will continue to evaluate billing patterns on a case-by-case basis.

To view the withdrawal notice, published in the June 18 Federal Register, click here.